2014 (10) TMI 815 - AT - Service Tax

Waiver of pre-deposit of service tax - Commercial and Industrial Construction - exemption Notification No.1/2006-ST, dated 01.03.2006 - Held that - Prima facie, we find that the applicant availed the benefit of exemption Notification knowing fully well they are not eligible for Cenvat credit and, therefore, it is a clear mis-statement of facts. Hence, the applicant is directed to make a pre-deposit of ₹ 1,00,000 within a period of six weeks from today. Upon deposit of the same, pre-deposit of balance amount of tax, interest and penalty shall remain waived and recovery thereof stayed till the disposal of the appeal - partial stay granted.

Summary

Issues: Application for waiver of pre-deposit of service tax under the category of Commercial and Industrial Construction for the period 2008-09 and 2009-10. Interpretation of exemption Notification No.1/2006-ST. Claim of Cenvat credit. Barred by limitation. Mis-statement of facts.

The judgment pertains to an application for waiver of pre-deposit of service tax amounting to Rs. 3,35,168/- along with interest and penalty for the period 2008-09 and 2009-10 under the category of Commercial and Industrial Construction. The appellant contended that the demand was raised by denying the benefit of exemption Notification No.1/2006-ST on the grounds that they had availed Cenvat credit. They argued that since the sub-contractor had already paid the service tax, the demand on the contractor was not justified. Additionally, they claimed that the demand was time-barred and there was no intent to evade tax as they had disclosed the Cenvat credit in their returns and claimed the exemption notification. The appellant relied on the decision of the Tribunal in the case of Viral Builders Vs Commissioner of Central Excise, Surat (2011 (21) S.T.R.457 (Tri.-Ahmd.)) to support their arguments.

On the other hand, the Authorized Representative for the respondent reiterated the findings of the Commissioner (Appeals) and argued that the appellant had not raised the issue of tax payment by the sub-contractor before the lower authorities. It was pointed out that the appellant had availed both the benefit of Exemption Notification No.1/2006-ST and Cenvat credit, making them ineligible for the exemption notification. After considering the submissions from both sides and examining the records, the Tribunal agreed with the Authorized Representative. The Tribunal found that the appellant had knowingly availed the benefit of the exemption Notification despite being aware of their ineligibility for Cenvat credit, leading to a mis-statement of facts. Consequently, the Tribunal directed the appellant to make a pre-deposit of Rs. 1,00,000/- within six weeks. Upon compliance with this directive, the pre-deposit of the remaining tax, interest, and penalty would be waived, and the recovery thereof stayed until the appeal's disposal. The appellant was instructed to report compliance by 7th August 2014.

In conclusion, the Tribunal's decision in this case centered on the interpretation of the exemption Notification No.1/2006-ST, the claim of Cenvat credit, the issue of limitation, and the alleged mis-statement of facts by the appellant. The judgment highlights the importance of accurately disclosing information and complying with tax regulations to avoid adverse consequences.